Saturday, March 05, 2011


CAFR School – A Lesson In Financial Accounting

6 Votes

Welcome to CAFR school!
The object of this essay is to teach you to be an informed citizen and taxpayer. We will examine just how to go through your local city, municipal, county, school district, and state government’s Comprehensive Annual Financial Report (CAFR) and come out the other side with millions if not billions of wealth and investments hidden by your government.
I was inspired to write this due to the several requests for myself to help others research and pinpoint their own government’s corruption and hidden wealth.
So here, now, I present to you the CAFR for the city of Aurora, Colorado, a municipal corporation…
First, understand that this report is basically the standard set-up and protocol for the structure of the Annual Reporting system. Therefore, you may apply this same examination to most CAFR’s across the nation and get the same results.
Second, understand that this is just the city (municipal corporation), and does not reflect the county, state, or all of the other incorporated municipal cities and unincorporated towns. it would be necessary to add all of these up to get a total look at the wealth of any county or state.
Also, the school districts and other districts (water, sewer, etc.) will each have a seperate CAFR, as they are also not part of the city government (as listed on the CAFR).
That said, I am going to refer to pages on the CAFR report (no particular order, sorry). Remember, we are looking for wealth that could be used for more important things as well as wealth that is not being used for anything at all except capital gains.
You should follow along with me using the Aurora City Comprehensive Annual Financial Report as your reference, which can be downloaded here:
And if you like, you can follow along with your local or county CAFR as well, making the adjustments for size and page numbers as you go. Your CAFR should be virtually identical in its structure to this one. If it is not, the key points we are about to cover will be in there somewhere.
(CLUE: Use the “search” function in your (.pdf) or document reader.)
To search for your own local, county, school district, or state CAFR, there are two options…
1) Type your city/county/state/district into your search engine, followed by the words “Comprehensive Annual Financial Report”, followed by the year. (Note that some governments take their sweet time getting these reports out, and so only the previous year may be available for download.) Also, be sure to spell the CAFR phrase out in full.
EXAMPLE:    (Aurora City Comprehensive Annual Financial Report 2009)
2) Go to your city/county/state/district (.gov) website and look for the word “Publications” or the phrase “Financial Statements” or “Annual Reports“. If these aren’t easily found (which not surprisingly they aren’t), most .gov sights have a search option. Be sure and get the CAFR if possible, as the “citizens guide” and the other budget reports are not the full report. Sometimes they are called “Annual Reports” or “Financial Statements” as well, but the majority are called the “CAFR”.
Ok, on to the Aurora City CAFR…

Page 148-150“Golf Fund”
It is very common to hold wealth in these types of funds. Golf courses are owned by local and sometimes other state governments. These are often referred to as business activities in the CAFR statement of liabilities and assets, but are called “Enterprise Operations” in the government circles.
Page 148 – (INCREASE (DECREASE)IN NET ASSETS) – Note that the CAFR reports a loss in assets for this golf fund of $219,398 for 2009. But remember that the CAFR is an accumlative look at assets, and so the fund has more money in it than it did in 2006. In 2007, it earned $389,119.
Page 148 – (NON-OPERATING EXPENSES) – INVESTMENT INCOME, MISCELLANEOUS REVENUE, ETC. – the money in this fund isn’t just sitting there, it is being invested. Thus, “Investment Income” is listed. “Non-Operating Expenses” refer to items happening outside of the care and budgetary obligations of the golf courses. This investment game is why the fund is showing a negative year of $219,398. These types of (+/-) listing of revenue and assets are very deceiving, as we cannot see in this CAFR how the money is invested, what is transferred out of this fund and into other funds, or the day to day investment activity.
Make no mistake, golf courses are businesses that are making profits for the government and for (municipal) corporations.

Net Assets in the “Golf Fund” as of December 31, 2009 - $24,927,256

Page 144 – 147“Waste Water Fund”
Once again, the management of water and sewage type of “business activities” are not only a profitable business (and a government monopoly for that matter, and often sold to private corporations to manage under government control), but also have funds created to build a power base of investment wealth.
Page 144Statement of Net Assets for Waste Water Fund – NET ASSETS – DECEMBER 2009 – show that this fund alone has $430,862,335 in wealth, that could be used for other taxpayer budgetary obligations. But as we can see, the INVESTMENT INCOME for this fund is quite nice, at $4,363,954 for fiscal year 2009. About 15 million for the last three years.
This fund grew by $20.89 million (INCREASE IN NET ASSETS) in 2009, even after (TRANSFERS OUT) of over $10 million.
Also, this fund has grown steadilly for the last 5 years, from $305 million in 2005, to over $430 million in 2009. Again, the CAFR is the cumulative look at government wealth and investment income. The taxpayer budget released to the people is not.

Net Assets in the “Waste Water Fund” as of December 31, 2009 - $430,862,335

Page 137 – 143“Water Fund”
This is the drinking water fund. Similarly with the other funds, this is money that could be used for other purposes. In this case, we start to see the vast wealth the city is hiding within these funds…
Page 137Changes in Net Assets for Water Fund – NET ASSETS – DECEMBER 2009 - show total monies for this fund at $944,082,042 – That’s almost $1 billion dollars for just this fund alone!!!
Again, this fund is investing the money, and shows investment income (return on investments) of over $11 million.
Net assets increased over 2008 totals by $62,555,533 (INCREASE IN NET ASSETS = Profit).
And since December 31, 2005, this fund has grown by over $322 million dollars!!!
Page 140 – Note that the city lists here its top water consumers (TEN LARGEST TREATED WATER CUSTOMERS). If you think about it carefully, you will see how smooth of a business these municipal corporations have carved out for themselves. The “city” is the city’s largest water consumer. But it doesn’t pay for its own water consumption… the taxpayers do! It bills itself, and deducts the bill from taxpayer funds!!! Brilliant.
Come on, you gotta give these guys points for creativity, right?

Net Assets in the “Water Fund” as of December 31, 2009 - $944,082,042

Page 135 – 136 – Exhibit C3 (General, TABOR, and Policy Reserve Funds)
Take a quick look at this graph. It gives you an idea of how much the city receives compared to what it has written as the budgetary requirement for what these particular funds service. This shows net assets for the General Fund, the TABOR Reserve Fund, and Policy Reserve Funds
Page 136 - FUNDS AVAILABLE DECEMBER 31 (2009) - Look at how the “budget” section is lower than the “actual” section for each year by millions of dollars. In other words, they had money left over, which of course they either reinvest or use elsewhere, or transfer out of the fund (intra-fund transfers notated as due from other funds).
Page 136FUND BALANCE (for these three funds) – At the end of fiscal year 2009 the fund balance was $52,245,924. Again, money available to be spent on taxpayers.
Page 135EXCESS OF REVENUES OVER EXPENDITURES – This states that monies collected (revenues) from the taxpayers in the form of tax, fees, fines, etc… were $24,319,789 more than what was spent . In other words, taxpayers spent way to much money for the services that their government provided, and that money is not refunded back to the taxpayers. Instead, it is placed into these funds we are going over.

Net Assets in the “General Fund”, the “TABOR Reserve Fund”, and the “Policy Reserve Fund” as of December 31, 2009 - $52,245,924

Just throwing this in as a comparative essay, comparing government wealth to the wealth and income of the people of the city.
2009 population of city – 314,326
2009 combined income of city’s population – $4,331,333,727
2009 unemployment rate - 7.5%
We will come back to these figures at the end of this essay…

Page 96“Enterprise Funds”
Just a note that the golf and water funds are called “Enterprise Funds”.
Legal Dictionary -
Main Entry: en·ter·prise
Pronunciation: 'en-t&r-"prIz
Function: noun : an economic organization or activity; especially : a business organization
5. a company organized for commercial purposes; business firm.
World English Dictionary:
enterprise (ˈɛntəˌpraɪz) [Click for IPA pronunciation guide]

1. a project or undertaking, esp one that requires boldness or effort
2. participation in such projects
3. readiness to embark on new ventures; boldness and energy
4. a. initiative in business

b. ( as modifier ): the enterprise culture
5. a business unit; a company or firm

The city actually has two pension funds.
General Employees Retirement Fund (GERP) – is listed at $280,221,050 in investment assets.
Elected Official’s and Executive Personal Defined Benifit Plan Fund is listed at $3,675,975 in investment assets.
Total monies stashed away in city pension funds – $283,897,025.
Remember, this is extra money in the fund, after all benefits were paid for 2009. This is the investment wealth. Employees have no equity in this money, as it is a private corporate government fund. If Aurora declares bankruptcy or a host of other ploys, this money will be liquidated, and none of that will be returned to the employees or the taxpayers who have been “contributing” it over the years.
A contribution is the act of giving your money away.
Employee contributions totaled - $4,795,873
City of Aurora (taxpayer money to “match”) contributions – $4,790,713
Pension funds are the scam of all scams, and the government employees have been duped into defending them with their souls, not comprehending that it isn’t even their money anymore, once they contribute it to the fund!!!
Taxpayer money is being redirected into these funds at an alarming rate. Some pension funds are called “non-contributory” funds, which means that only the government (taxpayer money) is funding the pension. Employees do not contribute to these funds.

Net Assets in the “Pension Trust Funds” as of December 31, 2009 - $283,897,025

Page 71 -73 - Internal Service Funds
More funds…
Page 72Statement of changes in net assets - We see the total for the following (3) Internal Service Funds listed as:
Fleet Management Fund
Print Shop Fund
Risk Management Fund
Totals for these funds are stated as $8,112,000
Again, this could be used for other things. The shell game continues…

Net Assets in the “Internal Service Funds” as of December 31, 2009 - $8,112,000

Page 60 – 70Non-Major Governmental Funds
These are funds which are used to store revenue before it is spent, and to house that extra revenue that is not spent, and to transfer to other funds and liabilities (usually profitable ones).
They include Special Revenue Funds, Debt Service Funds, and Capital Projects Funds. Read the descriptions of each to get an idea of what they are used for starting on page 60-61.
(Fund balances can be found listed on page 66 – 70, in the chart called COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES” for Nonmajor Governmental Funds.)

SPECIAL REVENUE FUNDS – account for revenues from specific sources that are required legally or by management decision to be used for particular activities.
Gifts and Grants Fund
-> $4,985,909
Development Review Fund
-> $2,082,719
Abatement Fund
-> $1,244,185
Community Development Fund
-> $2,669,399
Enhanced E-911 Fund
-> $5 ,414,600
Conservation Trust Fund
-> $8,585,532
Emergency Contingency Fund
-> $241,172
Parks Development Fund
-> $4,202,949
Arapahoe County Open Space Fund
-> $8,841,223
Recreation Services Fund
-> $171,374
Cultural Services Fund
-> $971,000
Designated Revenues Fund
-> $19,983,620
Policy Reserve Fund
-> $21,332,318
TABOR Reserve Fund
-> $8,778,851
Cherry Creek Fence General Improvement District (GID)
-> $18,095
Aurora Urban Renewal Authority (AURA) General Fund -
-> $71,673

DEBT SERVICE FUNDS – account for the accumulation of resources to pay principal, interest and agency fees on governmental long-term debt.
City Debt Service Fund
-> $1,628,854
Special Improvement District (SID) Debt Service Fund
-> $2 96,371
Surplus and Deficiency Fund
-> $596,081
Aurora Urban Renewal Authority (AURA) Debt Service Fund
-> $1,357,231
Aurora Capital Leasing Corporation (ACLC) Debt Service Fund
-> $17,434,872

CAPITAL PROJECTS FUNDS – Capital Projects Funds are generally used on construction projects, restoration of infrastructure and buildings, etc… But it is important to understand that these funds are being invested. They can sit around for years before the actual project they are “funding” even gets started. Again, they are places to store revenue (taxpayer collections) while making a profit by investing that money. Evil.
City Capital Projects Fund
-> $23,525,670
Bond Proceeds Fund
-> $0.00
Building Repair Fund
-> $1,562,600
Aurora Capital Leasing Corporation (ACLC) Capital Projects Fund
-> $0.00

Page 70 – Fund Balances December 31, 2009 – After listing all of these funds out in detail under the NONMAJOR GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED DECEMBER 31, 2009, and listed as “Total Nonmajor Governmental”, we see that some are in the positive and some in the negative. But we can see that these funds added together total $135,996,298.

Page 70 – NET CHANGE IN FUND BALANCES – Here we can see that in total, as a collective fund balance, these funds grew by $9,756,515 in 2009, which was considered a bad year for investments and government budgets.

***Note: It is likely that much of these “non-major governmental funds” are actually designated for specific budgetary items, and the government will tell you this to keep you from claiming that they are hoarding the money in these funds. But in reality, there is no law or contract written for most of these funds that require that money to be used for the purposes they claim. Thus, they can close the fund at any time, not use it for its intended purpose, and/or transfer that money to other funds for their own investment fun! This will be a big debate by the government officials that you approach about using these funds for the benefit of the taxpayers. Do not let them get away with this. Ask them for the specific law or contract that proves their claim. Threaten them with treason and lying under oath, and be sure and film your encounter so that you have a record of their lies. Make them prove everything they say by backing it up with code or law. Good times…
You can read about restricted net assets on page 36.

Page 59General Fund Balance - This just states that the general fund has an extra $22,143,755, which was not used in the taxpayer’s interest to meet budgetary requirements for this year. This is a surplus in tax dollars collected.

Page 52RISK MANAGEMENT/CONTINGENT LIABILITIES – Just an explanation of how the money placed into funds is invested with the intent to pay for future obligations, in this case lawsuits. Read this entire paragraph a couple of times for your enjoyment and comprehension…
Also, know that many activities funded by government, including pensions, are actually paid for by the returns from investments by these funds! They even have a fund to pay for “self-insurance” of up to $1,000,000. This means that the city covers their employees with the investment return on some fund somewhere that makes at least a $1,000,000 in profit. And I suppose they transfer money from other funds when there is a bad year. I don’t believe Aurora is one of those cities, because it has a law which limits lawsuit amounts to $150,000 per person and $600,000 per incident. So private insurance from a carrier is better for the city, according to its managers. But that means that the people of this municipality are out of luck if their claim/lawsuit against the “city” is for more than this law allows for. Tyranny at it’s finest, with state laws that prevent a citizen from collecting proper damages from the private government corporation that caused their loss.
Simply stated… This and most other cities, counties, and states have funds for which they stash away and invest taxpayer money called “Risk Management Funds”. This is the money that is used to pay for lawsuits and other damages that are caused to the citizens (taxpayers) within that particular corporate government.
So the taxpayers are suing themselves when they sue the city, and can only acquire the money that is hiding in this fund for the protection of the city.
Lawsuits are paid for by the investment return on this fund! Brilliant!!!

Here is the list of actual pension funds offered by the municipality (city). They are bulked into the funds discussed earlier.
The city of Aurora provides the following plans:
-General Employees’ Retirement Plan (GERP)
-Elected Officials’ and Executive Personnel Defined Benefit Plan (EOEP)
-Fire Pension Plan (Old Hire-Fire)
-Police Pension Plan (Old Hire-Police)
-Other Postemployment Benefits (OPEB)
-Fire Department Money Purchase Pension Plan (New Hire-Fire)
-Police Department Money Purchase Pension Plan (New Hire-Police)
-Executive Retirement Plan – Money Purchase Pension Plan (ERP)
Imagine, this is happening all over the country, in every state, county, municipality, district, etc… Each one being funded with taxpayer dollars at least equal to employee dollars, and sometimes up to 7000% more than what the employees are putting in themselves! And some are solely funded by taxpayer money!!!
Walter Burien has estimated that Pension Funds across the country account for $26 trillion dollars.
And none of that belongs to the people or to the employees of the government! A simple Presidential Directive, Executive Order, or the false-flag bankruptcy of a state government, and these funds are gone forever…

Page 37Restricted for Arbitrage – Very Important!!!!
Federal tax law provides that, with the exception of certain “temporary periods”, governments may not invest the proceeds of tax-exempt debt in a higher yielding taxable security. Arbitrage occurs if a government earns more than the yield allowed by law. Excess arbitrage earnings must be rebated to the Federal government. All outstanding bonds and COPs are reviewed annually for potential arbitrage rebate liability and corresponding reserves are established as necessary.
Arbitrage amounts anticipated to be paid with funds held in the City Debt Service Fund – $33,569.
This simply means that when the state, county, city, pension fund, and districts invest their money into certain investments, and then make what you might call an accidental or illegal profit above and beyond what is expected due to a glitch in the market system, that money must be given to the Federal government! This is cheating by the way, taking advantage of a mistake to make a profit – for instance buying and then immediately selling a stock or a currency for a profit that is an error, and will eventually just hurt the rest of the market, which must make up for that mistake somehow. Hard to explain, but the point is that governments across the country all do this, collectively making a fortune for the Federal Government, who does not complain about it much… instead forcing by law that this arbitrage profit be handed over to them! Crime of the century if you ask me…
This is an called an arbitrage profit.
Now imagine every government in the country, more than 185,000, acquiring wealth of this nature and sending it to the Fed…
Here is a good basic definition of arbitrage:

Just read this section, as it is just telling us that the city has the “right” by state law (CODE) to invest, and it lists well over $1 billion in investments, much of which we have already covered.
Of course, all investments are not covered. The city makes loans and writes bonds for projects both within and outside of the city. This is listed as a liability, but will of course be an asset when the loan or bond is paid off.
Often the city will put cash in the bank, float a bond off of that cash, invest the money that is still in the bank being used as collateral for the bond, and then charge taxpayers for the debt service of the bond, while making investment profit on the cash that is still in the bank that the bond was backed by.
That’s the shell game…

Page 19 - COMPONENT UNITS, Statement of net assets
The city is a business…
These are the side businesses or “joint-ventures” that the city is involved in.

Add an extra $76,611,082 in assets, over $33,000,000 of which is cash and liquid investments (stocks, etc…).

And finally, last and actually least, we have the “Management’s Discussion and Analysis”.
This is a very basic statement, which does not include the majority of the wealth that we have uncovered in this report. Here is the Financial Highlights section on page MD&A1 (Managers Discussion & Analysis). This is the CAFR for dummies, and is very deceiving because it includes buildings, vehicles, etc… While these are assets, they are not necessarily able to be “liquidated” like the stocks and other investments in the funds. It does include some of the assets we have talked about, but definitely not all by a long shot, since some funds are not required to be reported in this section, like “non-governmental funds”.
But even so, we can see that the city of Aurora is a very wealthy city. The CAFR States…
“The city’s assets exceeded liabilities at the end of 2009 by $4.3 billion (net assets). Of this amount, $362.4 million, or 8.4% was UNRESTRICTED and may be used to meet the city’s ongoing obligations.”
***Note: This is of course seriously and criminally misleading… as we have uncovered over $900 million in just the “Water Fund”, remember?
“Citywide net assets increased $89.4 million in 2009.”
This is why you must not stop at this section of the report, which of course is always the first section of the CAFR. It is the first false signpost you must see past to get an accurate accounting of your governments wealth and investment totals as reflected in the fund balances shown later in the report.
At best, this first section can be used to see capital assets (land, buildings, vehicles, etc…) that are owned by the city, and to see the taxes collected and spent. This is part of what is reported on the “Taxpayer Budget” every year to the people, which invariably always shows a “deficit”.
Obviously, this just isn’t the case. The CAFR never lies…
Well, sometimes!

So let’s add up just what we have uncovered here in these funds and investments:
Golf Fund =                                     $24,927,256
Waste Water Fund =                $430,862,335
Water Fund =                             $944,082,042
General, TABOR Reserve,
and Policy Reserve Funds =     $52,245,924
Pension Trust Funds =            $283,897,025
Internal Service Funds =             $8,112,000
Non-Governmental Funds =  $135,996,298 (This includes the TABOR and Policy Reserve Funds, so – $8,778,851 and $21,332,318 totaling $30,111,169.)
+                                                  So… – $30,111,169   
TOTAL FUND BALANCES = $1,850,011,711

So, total fund balances which can be used or liquidated to be used for the taxpayer’s benefit = $1.85 billion

In retrospect, the population of this town as stated on the CAFR above is 314,326 people.
$1.85 billion equates to the government holding about $5,885 in cash for each person in the “city”, not including the other assets included in the $4.3 billion stated in the total assets statement (buildings, land, vehicles, etc…).
But these folks are also being taxed by the county, the school district, and the state government. So there is a whole other can of worms…
Also, the CAFR is a cumulative accounting of government wealth, not just one year. So as a comparison, just these fund balances (not including capital assets as listed in the “Financial Analysis”) also represent about 40% of the total income earned in 2009 by the entire population of the city!

——————————End Of Report——————————-

Now, I am no financial expert, so there is much more to these reports than I can tell you here – secrets way too deep for my newly trained eye. And if you go far enough back, you will find “discrepancies” and wonder just what happened to all that money! There are certainly other wealth bases and investments that are eluding me as well. But this is a classic example of most municipalities and counties across the nation.
And remember this is just the city, not the county or districts within, which each have their own seperate funds, investments, and report on a seperate CAFR. And the state has it’s own government and CAFR as well, for which you pay your taxes to.
I hope that this helps you in your efforts to understand and read the legalese that is the Comprehensive Annual Financial Report. May this be your guide.
And remember…
None are more hopelessly enslaved than those who falsely believe they are free.” –Johann Wolfgang von Goethe
Keep up the good fight!
For more information on CAFR’s, please go to these websites:
– (R.I.P. Our hero, Gerald R. Klatt)
-Clint Richardson (
Thursday, March 3rd, 2011

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